Bitcoin ATM Trends in 2015

Bitcoin ATM industry matures and it is now more than 2 years passed after the first bitcoin ATM installation. Let’s look at what were the most prominent events and trends in bitcoin ATM sphere during 2015 year.

Growth continued

Although there was a slower growth compared to the previous 2014 year it was still a significant increase in number of bitcoin ATM installations. Number of bitcoin ATMs worldwide grew from 330 to 536 bitcoin machines.

The speed of bitcoin ATM installations increased at the very end of the year (jump on the chart in December 2015). Important that new installaitons number was approximately similar to 2014 year, however, in 2015 we see a closure of more machines as well as more reshuffling happens (new locations for old machines). For comparison, in 2014 there were 43 locations delisted from the site, while in 2015 the number of closed locations increased to 183.

Market self-cleaning

This was happening both on operators and manufacturers side. As mentioned above many locations closed. This year brought some clarity that running a bitcoin ATM can’t make you rich overnight. Many individuals who bought bitcoin ATM hardware without a clear business plan ended up closing and reselling their machines. Even some big players closed their operations, e.g. Zenbox who at some point had partnered and operated roughly 20 units now is not present on the bitcoin ATM field.

On the manufacturer side – two big bitcoin ATM producers has left bitcoin ATM scene as well. One is Las Vegas based Robocoin, which supplied bank-grade level bitcoin ATMs with contradicting palm-vein scanners and another one is Skyhook, company that supplied the cheapest bitcoin machine on the market for only $999. The failure of the former was due to CEO Jordan Kelley mistakes, both strategic as forcing operators to switch to their wallet solution and public miscommunication when delay in delivery happened, and finally loss of the company’s reputation in bitcoin community. The company later re-branded to Romit and concentrated on bitcoin remittance wallet.

The failure of the latter was probably due to lack of strategy and basic non-profitability of the business model as they supplied the cheapest model, which presumably barely covered the costs of the components. Skyhook has not announced any quit of business and from feedback of some operators the company seems to be still doing business (at least accepting orders on the site), but there is basically no support from the company and no guarantee that you get a unit which you paid for. As a result, number of installations for both types of machine has decreased significantly.

Concentration trend

Over 2015 there was a clear trend in consolidation of operators businesses. Some big players appeared who now run big networks of bitcoin ATMs. This shift from individual operating to company operating is probably dictated by stricter regulation (investment in legal costs makes sense on high scale), also other investments, e.g. customization of bitcoin ATMs software justified when you run many machines.

To name the biggest operators currently on the market:

Operator name

Number of machines

Preferred machine type

Primary area of operation

Cottonwood Vending

24

Satoshi1 (Genesis Coin)

New York, US

Instacoin

14

Lamassu

Montreal, Canada

Red Leaf Chicago

14

Satoshi1 (Genesis Coin)

Chicago, US

SatoshiPoint

13

General Bytes

London, UK

EasyBit

11

BitAccess

Worldwide

CoinSource

11

Satoshi1 (Genesis Coin)

US-wide

Similar pattern was observed on the manufacturers side. There is a small group of Bitcoin ATM manufacturers representing majority of bitcoin machines installed (75% of all locations). The leading two producers are Lamassu and Genesis Coin with about 25% share each, and they are followed with BitAccess and General Bytes with 13% and 12% shares respectively.

Fees increase

This is a broadly discussed topic, which is touched almost every time people discuss bitcoin ATMs and how useful they are. Many users of bitcoin machines complained about high fees. I’ve written two posts about how high are the bitcoin fees on average (bitcoin ATM fees analytics Sep 2014, bitcoin ATM industry overview including fees Oct 2015). Over 2015 there was a steady increasing trend in bitcoin ATM buy fees – it grew from ~5.5% to 7%. Average bitcoin ATM fee for selling bitcoin stayed about the same level at 5.5%.

Two main factors which led to price increase of using a bitcoin ATM by operators are legislation and lack of bank support. Legal costs investments might be quite high especially in US (and this is where majority of machines were installed lately). Banks are still reluctant on business which run bitcoin ATMs, because they a) doing some “bitcoin” stuff, b) deals with a lot of cash which gets deposited periodically to account. Workaround to get cash converted to bitcoins on regular basis with substantial volume increases expenses, which results in the final price for customers – fees.